CHEYENNE, Wyo. (Feb. 12, 2020) – A bill introduced in the Wyoming House would establish a precious metals bullion depository in the state. It would not only create a safe place to store precious metals; it would also facilitate the everyday use of gold and silver in financial transactions in Wyoming and set the stage to undermine the Federal Reserve’s monopoly on money.
A coalition of nine Republicans introduced House Bill 198 (HB198) on Feb. 11. The legislation would create the Wyoming Bullion Depository.
“The depository is established to serve as the repository for and to safeguard and administer bullion and specie that may be transferred to or otherwise acquired by the state or an agency, political subdivision or another instrumentality of the state.”
Use of the Wyoming depository would not be limited to state agencies. Individuals, businesses, charities and banks could also store precious metals in the facility.
Significantly, the depository would feature a process to transfer gold or silver in depositor’s account to other account holders, individuals or businesses by check or electronic means. In practice, private individuals and entities would be able to purchase goods and services, using assets in the vault the same way they use cash today. It would essentially set the stage to establish a specie- and bullion-based bank introducing currency competition with Federal Reserve notes.
In 2018, Wyoming set the foundation for using gold and silver in everyday transactions when it enacted a law that defines gold and silver specie as legal tender and eliminated all taxes levied on it.
The effect has been most dramatic in Utah where United Precious Metals Association (UMPA) was established after the passage of the Utah Specie Legal Tender Act and the elimination of all taxes on gold and silver. UPMA offers accounts denominated in U.S. minted gold and silver dollars. The company also recently released the “Utah Goldback.” UPMA describes it as “the first local, voluntary currency to be made of a spendable, beautiful, physical gold.”
Constitutional tender expert Professor William Greene said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it could create a “reverse Gresham’s effect,” drive out bad money, effectively nullify the Federal Reserve, and end the federal government’s monopoly on money.
“Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”
The existence of an in-state bullion depository could also facilitate establishing gold reserves in Wyoming and create an avenue toward financial independence. Countries around the world, including China, Russia and Turkey, have been buying gold to limit their dependence on the U.S. dollar. Speaking of the Texas depository, University of Houston political science professor Brandon Rottinghaus said a state depository can serve a similar function.
“This is another in a long line of ways to make Texas more self-reliant and less tethered to the federal government. The financial impact is small but the political impact is telling, Many conservatives are interested in returning to the gold standard and circumvent the Federal reserve in whatever small way they can.”
At the time of this report, HB198 had not been referred to a committee. Once it receives a committee assignment, it must pass by a majority vote before moving forward in the legislative process.